Part of what determines mortgage interest rates are worldwide economic events. What will also determine the interest rate you pay is your credit score. That you have control over.
The biggest mover of mortgage interest rates is U.S. Treasury bonds. As bond prices go up, yields go down.
Report: When the European economy was threatened by instability in Greece and other countries, investors worldwide turned to American bonds as safe investments; that helped lower U.S. interest rates.
Mark Greenberg of Wealth & Tax Planners in Walnut Creek, Calif., says, “Long term rates are set by the ‘market’ (traders, banks, etc., i.e. the participants’ collective wisdom about where rates should be). Mortgage rates, he explains, tend to follow the rates on 1, 5 and 10-year Treasury notes.
“As demand pushes bond prices up, they cost more, so they yield less (investors pay more for the same dividend amount). The converse is also true.”
Read more: http://community.nasdaq.com/News/2011-08/what-moves-refinance-mortgage-rates.aspx?storyid=91011#ixzz1VKghNACR